DAVID Cameron yesterday announced two wide-ranging inquiries into the banking system, pledging to probe the “culture and standards of the industry and bring those responsible for fixing the Libor interest rate to justice”.

“The British people want to see bankers who acted improperly punished,” Cameron told the House of Commons.

The news came soon after the UK’s fraud squad confirmed that it is considering whether it can pursue criminal prosecutions against those involved in the rate fixing scandal.

Under the government’s plans Andrew Tyrie MP will lead a joint committee of both Houses of Parliament to investigate the culture of British banking and ask whether existing criminal and civil sanctions work as deterrents.

It is expected to complete its report by Christmas and its recommendations will be included in the forthcoming Banking Reform Bill.

“This committee will be able to take evidence under oath, it will have full access to papers and officials and ministers – including ministers and special advisers from the last government – and it will be given all the resources it needs to do its job properly,” Cameron said.

Separately Martin Wheatley, current head of financial conduct at the Financial Services Authority (FSA), will lead an independent review of the Libor interest rate, investigating the need for greater transparency in submitting and compiling the daily rate.

He is expected to produce his findings by September, in time for the results to influence the forthcoming Financial Services Bill.

The FSA will also work with the Serious Fraud Office (SFO) to review evidence of rate fixing, with a decision on whether criminal charges can be brought under existing laws due by the end of the month.

However, Cameron yesterday resisted opposition calls for a full-blown public investigation similar to the Leveson inquiry into media ethics.

“This is the right approach because it will be able to start immediately, it will be accountable to this House and it will get to the truth quickly, so we can make sure this can never happen again,” he said.

The decision to allow the inquiry access to former officials raises the prospect of Labour’s Ed Balls and Ed Miliband, both Treasury advisers in the last government, being called to appear in front of the committee.

Labour is pressing for a fully independent rather than parliamentary inquiry into the broader banking sector, with plans to raise the party’s objections in the House this week.

Meanwhile chancellor George Osborne suggested that prosecutions of bankers were a possibility, urging regulators “to use every legal option available” to punish those who abused the Libor rate.

The Treasury also confirmed that the proceeds of the record-breaking £59.5m FSA fine on Barclays will be paid to the Exchequer for the benefit of taxpayers. Until now money given to the FSA was used to subsidise levies paid by other financial firms.